Gold prices rose on Friday but were set for a second consecutive weekly decline as the market awaited the release of U.S. payrolls data which will provide additional insight into the Federal Reserve‘s interest rate cut trajectory.
In the UAE, gold rates remained largely steady with 24-carat gold losing AED0.25 to AED319.75 and 22-carat gold remaining unchanged at AED296.25. Additionally, 21-carat gold and 18-carat gold remained at AED286.75 and AED245.75, respectively.
Globally, spot gold gained 0.49 percent to $2,637.55 per ounce, as of 6:08 GMT, after hitting its lowest since November 26 earlier in the session. Prices fell about 0.4 percent so far this week. Spot gold hit a record high of $2,790.15 on October 31. Meanwhile, U.S. gold futures inched up 0.38 percent to $2,658.35.
The dollar index gained 0.10 percent to 105.82, traditionally making bullion less attractive for other currency holders.
Rate cut bets fall
Gold prices rose as the market awaited the U.S. payrolls report due at 13:30 GMT today. Non-farm payrolls likely increased by 200,000 jobs in November after rising by 12,000 in October. Another set of data on Thursday revealed that the number of Americans filing new applications for unemployment benefits rose slightly last week, signaling steadily easing labor market conditions as the year comes to an end.
Markets currently see a 70.1 percent chance of a 25-basis-point cut by the Federal Reserve in 12 days, according to the CME FedWatch Tool, down from 77.5 percent in the previous session.
Fed Chair Jerome Powell said on Wednesday that the U.S. economy was stronger than it had appeared in September when the central bank began cutting rates, signaling caution around the pace of future rate cuts. Higher interest rates impact the appeal of non-yielding assets like gold. The Fed’s Beige Book showed on Wednesday that U.S. economic activity expanded slightly in most regions since early October, with inflation rising at a modest pace and businesses expressing optimism about the future.
Data on Tuesday revealed that U.S. job openings increased moderately in October while layoffs declined. A strong jobs report may also push the Fed to take a more cautious approach when cutting rates. The strong U.S. labor market report comes as progress in lowering inflation to the 2 percent target seems to have stalled, suggesting that the central bank may pause its rate-cutting cycle next year.
Inflation concerns persist
Several U.S. central bankers this week signaled support for additional interest rate cuts but remained concerned over inflation’s trajectory, particularly since President-elect Donald Trump’s re-election last month. St. Louis Fed President Alberto Musalem said that it may be appropriate to pause rate cuts this month since the risks of lowering borrowing costs too quickly are greater than those of easing too little.
Meanwhile, San Francisco Fed President Mary Daly said there is no sense of urgency to lower interest rates and that a lot more work needs to be done to deliver on the 2 percent inflation target and durable economic growth.
Concerns about Trump’s trade tariffs and their effect on the global economic outlook may impact investor appetite for riskier assets, further supporting demand for safe-haven gold. Trump pledged to impose big tariffs against America’s three biggest trading partners, Mexico, Canada, and China and also threatened a 100 percent tariff on ‘BRICS’ nations.
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Other precious metals
Amid the rise in gold prices, the precious metals market saw positive movement on Friday. Spot silver gained 0.14 percent to $31.38 while platinum gained 0.32 percent to $941.35 and palladium rose 1.25 percent to $975.
